Intuit Academy Tax Level 1 with Accurate Questions &
Correct Answers (Verified Answers) and Full Deep
Expert Rationales | Latest (2026/2027) Updated
Version {JUST RELEASED}
1. Below the line deductions include
A. Educator expenses
B. Medical expenses
C. Student loan interest
D. HSA contributions
Correct Answer: B
Expert Rationale: Below-the-line deductions are itemized deductions reported on
Schedule A that are subtracted after adjusted gross income (AGI) is calculated. Medical
expenses are a below-the-line deduction. Educator expenses, student loan interest, and
HSA contributions are above-the-line deductions (adjustments to income). Medical
expenses is the correct answer.
Test-Taking Tip: Below-the-line = itemized deductions on Schedule A. Above-the-line
= adjustments to income on Schedule 1.
2. Eligible educators can deduct up to ______ of qualified expenses paid during the
tax year.
A. $250
B. $500
C. $1,000
D. $2,000
,Correct Answer: A
Expert Rationale: Eligible educators can deduct up to $250 of qualified expenses paid
during the tax year. This is an above-the-line deduction for unreimbursed expenses for
books, supplies, computer equipment, and other materials used in the classroom.
Test-Taking Tip: Educator expense deduction = $250 per educator.
3. Which of the following is an ineligible medical expense for HSA, Archer MSA,
and MA MSA?
A. Prescription medications
B. Dental treatments
C. Cosmetic surgery
D. Doctor visits
Correct Answer: C
Expert Rationale: Cosmetic surgery is generally an ineligible medical expense for HSA,
Archer MSA, and MA MSA distributions unless it is necessary to improve a deformity
arising from a congenital abnormality, personal injury, or disfiguring disease.
Test-Taking Tip: Cosmetic surgery = ineligible for HSA/MSA unless medically
necessary.
4. The net capital gain is taxed at ______ if the married filing jointly taxpayer
income is less than $80,800.
A. 0%
B. 15%
C. 20%
,D. 28%
Correct Answer: A
Expert Rationale: For married filing jointly taxpayers with taxable income less than
$80,800, the net capital gain is taxed at 0%. The 0% rate applies to taxpayers in the
lower tax brackets.
Test-Taking Tip: Capital gains tax rates: 0% (low income), 15% (middle), 20% (high).
5. To claim a child as a dependent, they must meet the qualifying child test or
______.
A. The qualifying relative test
B. The gross income test
C. The support test
D. The residency test
Correct Answer: A
Expert Rationale: To claim someone as a dependent, they must meet either the
qualifying child test or the qualifying relative test. The gross income test, support test,
and residency test are components of these tests.
Test-Taking Tip: Dependent = qualifying child OR qualifying relative.
6. Ordinary dividends are taxed at the same rate as ______ income tax rate.
A. Capital gains
B. Ordinary
C. Corporate
D. Estate
, Correct Answer: B
Expert Rationale: Ordinary dividends are taxed at the same rate as ordinary income tax
rates. This means they are taxed at the taxpayer's marginal tax rate.
Test-Taking Tip: Ordinary dividends = ordinary income tax rates. Qualified dividends =
capital gains rates.
7. Distributions spent for qualified medical expenses of your dependent from HSA,
Archer MSA, or MS MSA are non-taxable when ______.
A. The dependent is claimed on your tax return
B. The distribution is used for qualified medical expenses
C. The distribution is rolled over
D. The distribution is less than $500
Correct Answer: B
Expert Rationale: Distributions from HSA, Archer MSA, or MS MSA are non-taxable
when they are spent for qualified medical expenses of the taxpayer, their spouse, or
their dependents.
Test-Taking Tip: HSA/MSA distributions = tax-free if used for qualified medical
expenses.
8. Which residency status is used when an individual is neither a U.S. citizen nor a
resident alien for tax purposes?
A. Resident alien
B. Non-resident alien
C. Dual-status alien
Correct Answers (Verified Answers) and Full Deep
Expert Rationales | Latest (2026/2027) Updated
Version {JUST RELEASED}
1. Below the line deductions include
A. Educator expenses
B. Medical expenses
C. Student loan interest
D. HSA contributions
Correct Answer: B
Expert Rationale: Below-the-line deductions are itemized deductions reported on
Schedule A that are subtracted after adjusted gross income (AGI) is calculated. Medical
expenses are a below-the-line deduction. Educator expenses, student loan interest, and
HSA contributions are above-the-line deductions (adjustments to income). Medical
expenses is the correct answer.
Test-Taking Tip: Below-the-line = itemized deductions on Schedule A. Above-the-line
= adjustments to income on Schedule 1.
2. Eligible educators can deduct up to ______ of qualified expenses paid during the
tax year.
A. $250
B. $500
C. $1,000
D. $2,000
,Correct Answer: A
Expert Rationale: Eligible educators can deduct up to $250 of qualified expenses paid
during the tax year. This is an above-the-line deduction for unreimbursed expenses for
books, supplies, computer equipment, and other materials used in the classroom.
Test-Taking Tip: Educator expense deduction = $250 per educator.
3. Which of the following is an ineligible medical expense for HSA, Archer MSA,
and MA MSA?
A. Prescription medications
B. Dental treatments
C. Cosmetic surgery
D. Doctor visits
Correct Answer: C
Expert Rationale: Cosmetic surgery is generally an ineligible medical expense for HSA,
Archer MSA, and MA MSA distributions unless it is necessary to improve a deformity
arising from a congenital abnormality, personal injury, or disfiguring disease.
Test-Taking Tip: Cosmetic surgery = ineligible for HSA/MSA unless medically
necessary.
4. The net capital gain is taxed at ______ if the married filing jointly taxpayer
income is less than $80,800.
A. 0%
B. 15%
C. 20%
,D. 28%
Correct Answer: A
Expert Rationale: For married filing jointly taxpayers with taxable income less than
$80,800, the net capital gain is taxed at 0%. The 0% rate applies to taxpayers in the
lower tax brackets.
Test-Taking Tip: Capital gains tax rates: 0% (low income), 15% (middle), 20% (high).
5. To claim a child as a dependent, they must meet the qualifying child test or
______.
A. The qualifying relative test
B. The gross income test
C. The support test
D. The residency test
Correct Answer: A
Expert Rationale: To claim someone as a dependent, they must meet either the
qualifying child test or the qualifying relative test. The gross income test, support test,
and residency test are components of these tests.
Test-Taking Tip: Dependent = qualifying child OR qualifying relative.
6. Ordinary dividends are taxed at the same rate as ______ income tax rate.
A. Capital gains
B. Ordinary
C. Corporate
D. Estate
, Correct Answer: B
Expert Rationale: Ordinary dividends are taxed at the same rate as ordinary income tax
rates. This means they are taxed at the taxpayer's marginal tax rate.
Test-Taking Tip: Ordinary dividends = ordinary income tax rates. Qualified dividends =
capital gains rates.
7. Distributions spent for qualified medical expenses of your dependent from HSA,
Archer MSA, or MS MSA are non-taxable when ______.
A. The dependent is claimed on your tax return
B. The distribution is used for qualified medical expenses
C. The distribution is rolled over
D. The distribution is less than $500
Correct Answer: B
Expert Rationale: Distributions from HSA, Archer MSA, or MS MSA are non-taxable
when they are spent for qualified medical expenses of the taxpayer, their spouse, or
their dependents.
Test-Taking Tip: HSA/MSA distributions = tax-free if used for qualified medical
expenses.
8. Which residency status is used when an individual is neither a U.S. citizen nor a
resident alien for tax purposes?
A. Resident alien
B. Non-resident alien
C. Dual-status alien
